US Dollar Index Analysis June 2016 (W,M)
Created on Wednesday, 01 June 2016 03:11
Written by Austin Galt
While there is no change to my longer term forecast I have become slightly less bullish about the current bear rally.
Let’s review the monthly and weekly charts.
US DOLLAR INDEX MONTHLY CHART
The PSAR indicator is my super loose setting and has just turned bearish so we have a solid indication there.
The Bollinger Bands show price finding support recently at the lower band and I now expect price to turn back down around the middle band which it so often does during big bear markets which is the expectation here. The middle band stands at 96.72 and perhaps price can push marginally above that.
I have drawn a Fibonacci Fan from the March 2008 low to the March 2015 high which preceded the actual 2015 high. But is shows some nice symmetry with the recent low at support from the 38.2% angle and I expect price to encounter resistance back up at the 23.6% angle. It is there where I favour a lower high to form.
I have added Fibonacci retracement levels of the whole move up from 2008 low to 2015 high and the expectation remains for the final pullback low to get back down to at least 76.4% level which stands at 77.83.
The RSI has turned back up but is still in weak territory and looks suspect from a bullish perspective.
The MACD indicator is bearish.
US DOLLAR INDEX WEEKLY CHART
The horizontal line denotes the previous swing low which was breached in the recent run down so we have a lower low in place and now just need a lower high to confirm the downtrend.
The Bollinger Bands show price is currently just above the middle band and I favour the next lower high to form around the upper band.
I have drawn a Fibonacci fan from the May 2014 low to 2015 high. Price recently found support at the 50% angle and I expect the lower high to be around resistance from the 38.2% angle.
I have added Fibonacci retracement levels of the move down from high. Previously, I was targeting the 76.4% level at 98.54 for the next lower high however I have become less bullish and hence am now targeting price to clip the 61.8% level which stands at 97.26.
The RSI is marginally in positive territory while the MACD indicator is bullish although neither looks overly impressive.
Summing up, I expect a lower high to form in June after which a strong and impulsive downtrend should take hold.